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Table of Contents
Government Regulation
We market and offer a broad range of merchandise through television, online, catalogs and other channels. The manner in which we
promote and sell merchandise, including claims and representations made in connection with these efforts, is regulated by a wide variety of
federal, state and local laws, regulations, rules, policies and procedures. Some examples of these that affect the manner in which we sell and
promote merchandise or otherwise operate our businesses include, but are not limited to, the following:
These laws, regulations, rules, policies and procedures are subject to change at any time. Unfavorable changes applicable to us could
decrease demand for merchandise offered by us, increase costs which we may not be able to offset, subject us to additional liabilities and/or
otherwise adversely affect our businesses.
Since October 1996, HSN has been subject to a consent order issued by the Federal Trade Commission, or FTC, which terminates on the
later of April 15, 2019, or 20 years from the most recent date that the United States or the FTC files a complaint in federal court alleging any
violation thereunder. Pursuant to this consent order, we are prohibited from making claims for specified categories of products, including claims
that a given product can cure, treat or prevent any disease or have an effect on the structure or function of the human body, unless we have
competent and reliable scientific evidence to substantiate such claims. Violation of this consent order may result in the imposition of significant
civil penalties for non-
compliance and related redress to consumers and/or the issuance of an injunction enjoining us from engaging in prohibited
activities. The FTC periodically investigates our business and operations on an ongoing basis for purposes of determining our compliance with
the consent order.
Online sales must comply with a variety of existing and new federal and state laws dealing with privacy, intellectual property, taxation, the
provision of online payment services and electronic contracts. While U.S. Supreme Court decisions generally restrict the imposition of
obligations to collect state and local sales and use taxes with respect to sales made over the internet in states in which internet retailers have no
nexus, a number of states have adopted or are considering initiatives that would impose sales and use tax collection obligations arising from
internet-based transactions. The imposition by the federal or state and local governments of various taxes and related obligations upon internet
commerce could create administrative burdens for our businesses, could put our businesses at a competitive disadvantage to the extent that
similar obligations are not imposed upon our competitors and could decrease future sales.
While we believe that the practices of our businesses have been structured in a manner to ensure compliance with these laws and
regulations; federal, state or local regulatory authorities may take a contrary position. Our failure to comply with these laws and regulations
could result in proceedings against us, fines and penalties and/or a diminution of our reputation, each of which could adversely affect our
financial condition, results of operations and businesses.
Intellectual Property
We regard our intellectual property rights, including patents, service marks, trademarks, domain names, copyrights and trade secrets, as
critical to our success. Our businesses also rely heavily upon software codes,
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• The Federal Trade Commission’s regulations related to the sale of products and/or commercial contacts with our customers or
potential customers, such as the Telemarketing Sales Rule and Do Not Call;
• The Food and Drug Administration’s regulations regarding marketing claims that can be made about cosmetic beauty products and
over-the-counter drugs, which include products for treating acne or medical products, and claims that can be made about food
products; and
• Regulations related to product safety issues and product recalls including, but not limited to, the Consumer Product Safety Act, the
Consumer Product Safety Improvement Act of 2008, the Federal Hazardous Substance Act, the Flammable Fabrics Act and
regulations promulgated pursuant to these acts.